What factors affect the cost of cover ?

Posted by admin On December 23rd 2020

Premium rates depend on a variety of factors, which may include:

  • Type of hospital – treatment in postgraduate teaching hospitals in London is more expensive, for example, and is reflected in higher premiums;
  • Location – this is mainly because the cost of medical care varies throughout the country (larger cities, such as London are again considerably higher);
  • The standard of accommodation available to the patient within the plan.

 

A further factor is the type of scheme that is taken out. To give an idea, many providers offer a budget scheme, which may limit a patient’s choice of hospital, or require treatment on the NHS if the waiting list does not exceed a maximum period of, say, six weeks. Any limitations on the range of cover provided will reduce the premium payable. This may take the form of a financial limit or cap on the amount of benefit that is provided, or limits on the range of treatment covered.

Another significant factor is the age of the person. The risk of disease or illness increases with age and, as a consequence of this, so does the probability of a claim being made under the terms of the plan.

 

EXCLUSIONS – PMI

PMI cover will not be provided for any pre-existing medical conditions or the costs of:

  • Routine dental treatment;
  • Routine maternity care;
  • Routine optical care (such as provision of spectacles or lenses);
  • Chiropody;
  • The treatment of self-inflicted illnesses, for example, drug use/abuse and alcohol;
  • Cosmetic surgery.
  • Alternative medicines and remedies.

Taxation of Premiums and Benefits

Premiums are themselves subject to insurance premium tax, but benefits are paid out free of tax. Employers who contribute to PMI on behalf of their employees are able to claim the cost as a deduction against corporation tax, as above.

Employer contributions are regarded as a benefit-in-kind as far as the employee is concerned, and are therefore taxable.

Long-term care insurance

Long-term care insurance (LTC) is the provision of funds to meet the costs of care that may arise along the way, when a person is no longer able to perform competently some of the daily basic actions involved in looking after themselves.

 

Long-term care insurance policies are no longer sold. They were used to provide a regular form of income to meet the cost of nursing home fees, or for home care to those no longer able to take care of themselves properly for reasons such as a disability or old age. The needs of an individual would have to be discussed with an advisor to ensure that needs are met with the cover provided.

 

The need for this cover has increased because:

  • Families are less able to take care of elderly relatives than perhaps they were in earlier generations (maybe because they live further away from each other, there are restrictions on their time, or because their accommodation is unsuitable);
  • People are living longer these days;
  • Expectations of quality of life in later years are higher;
  • There are worries or concerns about the standard of care that the state and the NHS can realistically be relied upon to provide.